Fresh entrepreneurs are very much passionate about launching their new startup or opening their new company. But what happens is that most entrepreneurs just wing it instead of taking their business seriously.
Smart entrepreneurs know that they need to take their time to make a business plan and research their strategies before getting into the competitive market. If you are also a new entrepreneur and are looking to launch your new company, you should definitely do thorough research.
On the flip side, if you run an established startup and are looking to switch up a business strategy or dive into a new market, you also need to conduct proper market research. If you won’t follow in these footsteps, your business will most likely sink in no time.
You must know how to conduct market research as an entrepreneur in order to stay afloat in the business world. This piece of content will teach you the right way to conduct market analysis like an expert. Let’s move on.
What is Market Research?
Market research is the process of gathering data and information that will help you better understand how your potential customers will respond to your current or upcoming products, goods, and services that you want to sell.
You will come to know about the answers to the following crucial questions upon successfully conducting your market research:
- Who are your competitors?
- What are the strengths and weaknesses of your competitors?
- Who are your potential customers?
- What is the size of your target market?
- What are the purchasing and shopping patterns of your customers?
- What price range are your potential clients ready to accept?
The purpose of market research is to find out why customers will buy your goods or services. It determines customer behavior and the ways in which cultural, social, and individual factors influence it.
Market research is divided into two different forms: primary market research and secondary market research. Primary market research deals with customers directly. On the other hand, secondary market research is about studying details and information that others have collected about the consumers of a particular product or service.
Primary Market Research
The initial market research may consist of online polls or telephonic interviews with randomly chosen members of a target group of people. It can also consist of studying your own sales records for the sake of collecting information.
Secondary Market Research
You can perform secondary market research by looking at blogs or articles written about a specific industry or extensive reports on the websites of numerous other firms. A business plan can be based on either a combination of both types of market research or a single type of market research.
Why Do I Need to Conduct Market Research?
You must conduct market analysis to evaluate the target market for a specific commodity or service and observe the customers’ reactions. Market research plays a critical role in assisting you
- Ensure your business decisions are risk-free
- Comprehend and become familiar with your customer’s preferences
- Recognize and prepare for changes in the economy and industry
- Increase profits by identifying growth opportunities
- Monitor or identify your competitors in the market
When to Conduct Market Research?
Market research is a crucial component of the business plan of any entrepreneur for new firms and startups.
It is so because market research gives information and details about a variety of factors of a business plan such as luring people to your company, generating more profit, and estimating the sales potential of your goods and services.
It is extremely beneficial to conduct market research for those whose organizations are already established but are going to undertake substantial changes, such as business relocation and expansion. Conducting market research will also help them support their business-related decisions.
How to Conduct Market Research
Here are some of the factors which you can take into consideration in order to conduct market research:
Determine the Purpose of Your Study
Businesses may do market research for a variety of reasons. It can be used to open up new opportunities, evaluate company risks (such as threats), or lessen problems.
To reduce future risks, you can consider going through issues that occurred in the past. Additionally, use past achievements to determine what you should carry on doing in the future.
Determine whether the market analysis is being conducted for external or internal goals before conducting market research. Among the external goals is convincing lenders to provide you with an easy company loan. Improving cash flow or business operations are examples of internal objectives.
Market analysis is one of the most crucial components of your business plan. It demonstrates to lenders the expansion possibilities of your company and your expertise in the industry.
Depending on the goal of your market analysis, different types of market research should be conducted. Let’s say that you carry out market research for internal objectives. You probably won’t need to gather as much information as you would for an external goal because it is for internal purposes.
Before starting your research, be sure to decide whether your study will be external, internal, or both.
Look at the Industry’s Outlook
Do outline the current situation of your industry in your market analysis. Include the industry’s future direction using indicators like growth, size, and current trends. Make sure you have solid evidence to support your assertions.
This part will show lenders and investors that you have done your market research on the business sector you are involved in. Additionally, it will show them whether investing in your chosen industry is worthwhile.
Pinpoint Target Customers
The fact is that not everyone will become a customer of yours. But it’s alright, nothing to worry about. Upon evaluating the market, you must identify who your potential clients are. This part of the process is known as the target market analysis.
You must have a thorough understanding of who and where your customers are. Your research must depict a detailed picture of your prospective clients. You need to give the following things a look:
- Age
- Marital or family status
- Income
- Education level
- Location
- Gender
- Occupation
Identify your client’s needs, hobbies, personalities, and demographics after you’ve narrowed down your target market.
Based on your study, you should develop customer personas as well. Numerous client personas are used by many firms for various purposes. Create different personas after compiling a variety of customer criteria. You should do it to represent your loyal customers.
Identifying your target market might help you promote your products more effectively and provide potential consumers with better service to solve their problems.
Your potential clients may alter with the expansion of your company. Check up on your target market at different times to make sure they are suitable for your company.
Find Out What Target Customers are Looking
Doing keyword research smartly is a great way to get an idea of what your target audience is searching for on the internet. Use any keyword tool to find out how many times on average your potential customers are searching for a product in a month.
You do not need to create a demand in the market for customers. Instead, you can provide services to their market.
Research Your Competitors
Analyzing competitors is very essential. Deeply analyze the websites, products, and services of your competitors after conducting proper research on them. Look at the goods and services they offer, the prices they charge, and the locations they sell their products or services in.
Look up reviews of their items and overall companies on the internet. You are attempting to look at what they do poorly in order to improve it and what they do effectively to improve or duplicate it.
Gather Extra Data
When it comes to doing market research, information and data are your biggest allies. Your firm will do better if you are successful in gathering a lot of information about your target market.
The information you collected should be accurate, pertinent, and unbiased. You should have enough proof to support your market research and take crucial decisions based on correct facts and flawless information.
To get more information, use reliable sources. You can benefit from various resources, including:
- City and local commerce websites
- Articles from trade journals
- Strengths and weaknesses of your competitors
- surveys or questionnaires of the target market
- Information is collected from focus groups or conversations with people in your target market.
Choose a Niche
If you have chosen a market and looking to enter for selling your service or product, you should see currently what other services or products are being sold in that particular market. Determine what price are you going to set for your products. Are they going to be the costliest, cheapest, or will the price be somewhat in between the two? You should also identify which products are going to be below and above your ones depending on quality and price tag.
Then paint a picture of the market sector in your mind, who are the potential buyers of your product, and how you can design it to attract more and more customers towards it. Furthermore, consider the demographics of your target audience. How many times will they buy your product/service, what do they do, and why will they buy your service/product.
Try Your Best to Be Innovative
The key to success is none other than innovation. Try to be as much creative as you can with your service or product. The more creative you are, the more the chances are that you will beat your competitors. You can achieve this goal with the help of an enthusiastic, active, creative, and innovative team. Let’s take the example of five school fellows. They started a small setup to sell pulled fruit drinks. Now they want to know what everyone thinks of their juice. What they can do is they can set up a stand at a local music festival and place two buckets outside of their setup.
They asked their customers to vote on whether the new entrepreneurs should quit their current jobs to create their drinks full-time. To answer this question, they requested them to toss their empty bottles into either a bucket labeled no or yes to vote. By the end of the weekend, the bucket marked with “Yes” was full of bottles, and a reputable juice company was established.
Take Action According to Your Market Research
Although performing market research may seem like a difficult and energy-consuming process, your company will benefit from it in the long run.
You will undoubtedly devote a significant amount of time, energy, and effort to your marketing analysis. But it’s worth everything. Don’t waste all that time that you have doing your comprehensive research. Take decisions on the basis of the analysis you have conducted and bring them into action.
If you did an analysis for external purposes, be ready to discuss your findings with investors and lenders.
Consider how you may improve your business using your results of market research for internal use. Use your market research to determine whether you can improve the effectiveness of any of your business operations.
Don’t simply put your market research in a box and store it for “some other time in the future.” Review your research from time to time to make any required adjustments to your business operations or overall company.
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